Australia’s wine oversupply continues to hit Western Australian wineries hard, particularly smaller boutique operations, with many resorting to other revenue streams to remain afloat.
Australia’s wine oversupply continues to hit Western Australian wineries hard, particularly smaller boutique operations, with many resorting to other revenue streams to remain afloat.
Swan Valley Wines proprietor Peter Hoffman said the small family-owned boutique winery had faced a raft of challenges during the past six years, including the worldwide wine glut, increased competition and a downturn in tourist numbers.
The Hoffman family bought the six-hectare Baskerville property in 1989, and secured a contract to supply wine grapes to the neighbouring Houghton winery.
But Houghton’s relocation to the South West in 1998, after its successful foray into the US market, led to the termination of the agreement with Swan Valley Wines.
That prompted Mr Hoffman to think about making his own wine, and the first vintage appeared in 1999, including the award-winning chenin, as well as grenache and shiraz varieties.
Wine production brought its own problems, however, particularly as Australian wines grew in popularity worldwide and a flood of new producers came onto the market.
“At that time there were only 500 small wineries supplying between five and 7 per cent of the Australian market, so when we entered the industry there were only 500 competitors,” Mr Hoffman said.
“But in 2000 there were 1,500 of them, and at last count there’s something like 1,876. So that really is the source of our problem.”
Competition also came in the form of local businesses in the Swan Valley, which grew from 50 in 1999 to 90 in 2006.
Adding insult to injury at that time was the drop in supply to the Japanese market, as well as a decline in tourist numbers, particularly from overseas.
In response to difficult market conditions, Swan Valley Wines decided to expand its range of products and add new services, in addition to wine production, to diversify revenue streams.
One of the additions to the business, and the most successful to date, was to offer wine-making services, for a nominated price per litre, to local grape growers looking to produce small quantities of wine with their own label.
The introduction of this service brought the winery’s total crush to 70 tonnes, equalling almost 50,000 litres, across 25 different varieties including chenin blanc, viognier, petit verdot and white grenache, along with traditional varieties such as chardonnay, shiraz and semillon.
Swan Valley Wines also introduced a new line of fruit wines under the Tropical Light label, with pineapple aperitif, guava table wine and mango and strawberry desert wines in the range.
A range of ports under the Amphisbaena Red label was also launched, as was the highly popular Chocolate Port, which has found a successful export market in the UK.
Mr Hoffman said the winery was also looking to expand its tourism business, capitalising on the food and wine trail and tours of the Swan Valley region, and investing in winery merchandise.
And, faced with increasing consumer demand for cleanskins, Mr Hoffman has placed his trust in a focus on product development and marketing. He forecasts that around 15 per cent of Swan Valley Wines’ trade will have to be products other than wine.
“I suspect that the only way to combat it [cleanskins and other market challenges] is to have a product that no-one else has, and something that is appealing,” Mr Hoffman said.
“For example, novelty packaging, especially for small wineries.
“You can pick up a cleanskin and it might be a premium wine…and they also now dispute whether your [labelled] wine is premium, because they might have opened a cleanskin up and found it extremely good.”
